Question

The MEC Company has two divisions: the Computer Division and the Printer Division. Cost and revenue...

The MEC Company has two divisions: the Computer Division and the Printer Division. Cost and revenue information for the two divisions for the year is as follows.

  

                                                                                   Computer               Printer

                                                                                      Division              Division

Revenue                                                                  $1,100,000             $750,000

  

Variable cost per unit                                                           $7                        $6

Number of units sold                                          75,000 units        52,000 units

  

Fixed costs:                                                                                                             

Costs unique to each division                                    450,000               375,000

Costs allocated by corporate headquarters               50,000                 70,000

  

  

           Compute the SEGMENT MARGIN for both the Computer Division and the Printer Division.

  • Computer, $65,000; Printer, $3,000

  • Computer, $75,000; Printer, negative $7,000

  • Computer, $575,000; Printer, $438,000

  • Computer, $450,000; Printer, $375,000

  • Computer, $125,000; Printer, $63,000

Business   Accounting   
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Answer #1

Anwer is 125000 and 63000

Computer Printer
Revenue        1,100,000        750,000
Variable Cost         (525,000)      (312,000)
          575,000        438,000
Cost Unique to each division         (450,000)      (375,000)
Margin           125,000          63,000

Variable cost = Unit Cost x total units sold

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